Where Did Capital Flow? Fifty Years of International Rate of Return Di¤erentials and Capital Flows

World capital ows are substantial. Since 2000, gross world capital ows have averaged about 25 percent of world GDP per year, while net capital ows have been in excess of 4 percent of world GDP. Figure 1 shows these net ows as a fraction of world gross domestic product (GDP) over this period. Robert Lucas (1990) presume